Remember 1998? If you do, you’re probably long enough in the tooth to be a managing director by now. But it may still make you sweat beneath your embroidered cuffs.

As a reminder, 1998 was the year in which the Asian financial crisis came to a head as first Asian and then Russian and Latin American currency pegs failed. The Russian stock market and the ruble collapsed. The government fell in Indonesia. The Brazilian stock market plummeted, and the New York Federal Reserve was forced to lend $3.5bn to the hedge fund Long Term Capital Management (LCTM) which was facing $1 trillion in default risk.

As ever, banks in 1998 responded by cutting costs and making layoffs. Peregrine Investments – then Asia’s largest private investment bank with around 1,700 employees worldwide, was forced to shut down. Merrill Lynch announced 3,400 redundancies, of which 400 were in London. Barclays made ‘sweeping job cuts’ after losing £335m in two weeks on proprietary trades related to the ruble. SocGen, ING and UBS made cuts too. Barclays then-chief executive Martin Taylor resigned in November. Four senior UBS executives resigned in October over losses related to LCTM.

So far, so familiar. The bad news is that strategists at Deutsche Bank think today’s global economic landscape is eerily reminiscent of that in the late 1990s. In a note out this morning they say that the collapse of China’s currency peg resembles the pre-1998 years in several important ways: i) it shows up the vulnerability of currency regimes that are pegged to the dollar when the Fed starts tightening; ii) it shows the danger of currencies overshooting on the downside when released from pegs., iii) it risks drawing in other currencies in a domino effect, iv) it risks competitive devaluations or ‘currency war.’

Deutsche notes that all of this is also taking place against an economic background echoing that of the late 1990s. Then too, there were soft commodity prices, Chinese disinflation, rising awareness of Asian economic weakness and a comparatively strong US economy. This time, however, the stakes are higher – the massive Chinese economy has $1.3 trillion in short term dollar liabilities and Chinese debt has jumped from 120% to 260% of GDP in the past seven years.

For the moment, however, Deutsche says it’s not that bad: ‘China could become a much bigger story than Asia 1997, although this is not our central view.’ Right now, Deutsche says the market is more concerned about the impact of a falling oil price. And if there is a China crisis? It’s worth remembering, at least, that global financial services employment boomed after 1998 – Goldman Sachs alone went from 10,622 employees in 1997 to 15,361 two years later.

Related articles:

We’ve already mentioned JPMorgan’s huge report on the investment banking industry globally. We haven’t mentioned that there’s a specific look at the evolution of the investment banking industry in Russia